Victoria Yudin has a great post on the Return transaction type in Payables Management. She gives a great overview and provides lots of details and screen shots. I won’t spoil the fun by repeating info here but if you use Dynamics GP payables you need to visit this post!
Return Trx Type in AP
Archived post from 2008. Dynamics GP and the links it points to have changed since; check current documentation before relying on version-specific steps.